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Australian manufacturers and wholesale distributors lag behind in ecommerce adoption

NetSuite Sponsored Study Reveals How Unprepared Australian Manufacturers and Wholesale Distributors Are to Take Advantage of Online Selling, Despite Strong Optimism

Sydney, Australia—29 October 2013—Research sponsored by NetSuite Inc. (NYSE: N), the industry's leading provider of cloud-based financials / ERP and omnichannel commerce software suites, has revealed that the Australian manufacturing and wholesale distribution sectors are lagging behind in Ecommerce adoption, with only 10 percent of companies currently able to receive orders directly over the Internet. Despite strong optimism about their prospects for growing the Ecommerce channel, with almost 75 percent of businesses viewing it as an opportunity, the study conducted by Frost & Sullivan has indicated just how unprepared they are to handle this growth.

"For manufacturing and wholesale businesses, Ecommerce is both an opportunity and a challenge," said Mark Dougan, managing director for Australia and New Zealand for Frost & Sullivan. "It offers a way to build closer and more direct relationships with the end customer, the ultimate consumers of their products, but also presents both strategic and operational challenges. The strategic challenge largely lies in the risk of bypassing long-established distribution channels. Our research identified that the main operational challenge is in linking the Ecommerce front-end to existing internal business systems."

The sponsored survey of 102 Australian businesses in the manufacturing and wholesale distribution sectors was carried out by Frost & Sullivan in September 2013, to understand the importance of the Internet as a channel for their future business success. It revealed that businesses in these sectors see the opportunities and benefits that Ecommerce can offer, particularly convenience for customers, reduction in distribution costs and linking customer orders directly with central business systems. While 76 percent of respondents envisage that customers will increase online ordering over the next few years, ordering direct from their websites is much less common than in the retail sector, with most currently only receiving orders via e-mail. Businesses still identify a number of challenges that are keeping them from adopting Ecommerce, including losing direct relationships with B2B customers, system integration issues and the feeling that they need to offer lower prices online.

According to Frost & Sullivan, while only a small percentage of B2C consumers are able to order directly from wholesalers and manufacturers online, more than 50 percent of Australian manufacturing and wholesale businesses now place orders directly with suppliers online. Over three-quarters of businesses expect to increase their online ordering from suppliers, citing quicker and easier ordering processes, access to a wider range of suppliers, less paperwork involved and lower prices than other channels as the top reasons.

Social Media Broadens Communication Channels with Customers
The Frost & Sullivan study indicates that adoption of social media as a communication channel with customers is increasing, with 30 percent of manufacturing and wholesale businesses now having a social media presence. Looking at manufacturing specifically, while take-up of social media is low compared to other sectors, it has doubled in the past three years to almost 15 percent. For both sectors, however, telephone and e-mail remain the dominant communication channels.

"Social media is becoming an increasingly important platform for customer communication and engagement," said Mr Dougan. "Businesses in the manufacturing and wholesale sectors are increasingly recognising the benefits of establishing direct communications with their end-consumers through social media."

Integrated Software Platform Overcomes Challenges
According to the research, a major challenge faced by many Australian manufacturers and wholesale distributors with a web presence is a lack of integration between their web front-end and internal back-end systems, with less than 20 percent having automated links. Respondents cite a lack of integration as a major issue for exploiting Ecommerce, followed by a lack of systems to service customers that cross between online and other channels, as well as a lack of systems that connect inventory to online sales channels. Without a unified software solution, these businesses face difficulties in maintaining a consistent brand experience in areas such as customer support, pricing, as well as increased operational costs to run and maintain each channel.

"Manufacturers and wholesale distributors have, in general, been unfairly portrayed as having a fundamentally conservative approach; however, what we are now seeing is that thriving and successful businesses have embraced change and understand the generational shifts in process and technology they need to make to remain relevant, competitive and grow profitably," said Mark Troselj, managing director of APAC and Japan for NetSuite.

"As the online environment accounts for an increasing proportion of overall sales, getting an omnichannel strategy right can deliver substantial and tangible results, but it can take years to develop. This is where cloud computing really opens doors, offering the opportunity for a lower cost and much lower risk rollout of the software needed to support an omnichannel strategy. Now they can unify separate channels to provide a single view of the customer, sales and revenue."

NetSuite SuiteCommerce enables B2C and B2B merchants, manufacturers and distributors to seamlessly connect every step of a multi-channel, multi-location business—from Ecommerce, point-of-sale (POS) and order management to merchandising, marketing, inventory, financials and customer support. Featuring an advanced webstore that allows the creation of uniquely branded and personalised shopping experiences optimised for multiple devices, SuiteCommerce empowers businesses to run across multiple touchpoints—web, brick-and-mortar stores, social, mobile—all from a single, unified cloud-based commerce system that provides unprecedented visibility into your business and customers. Please visit www.suitecommerce.com for more information.

Today, more than 16,000 companies and subsidiaries depend on NetSuite to run complex, mission-critical business processes globally in the cloud. Since its inception in 1998, NetSuite has established itself as the leading provider of enterprise-class cloud financials/ERP suites for divisions of large enterprises and mid-sized organisations seeking to upgrade their antiquated client/server ERP systems. NetSuite excels at streamlining business operations as demonstrated in a recent Gartner study naming NetSuite as the fastest growing financial management software vendor on a global basis. NetSuite continues its success in delivering the best cloud ERP/financials suites to businesses around the world, enabling them to lower IT costs significantly while increasing productivity, as the global adoption of the cloud is accelerating.

NOTE: NetSuite and the NetSuite logo are service marks of NetSuite Inc. Third-party trademarks mentioned are the property of their respective owners.

Cautionary Note Regarding Forward-Looking Statements:
This press release contains forward-looking statements relating to expectations, plans, and prospects including expectations relating to the future growth of the online retail market. These forward-looking statements are based upon the current expectations and beliefs of NetSuite's management as of the date of this release, and are subject to certain risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements including, without limitation, the risk of continued adverse and unpredictable macro-economic conditions. All forward-looking statements in this press release are based on information available to the Company as of the date hereof, and NetSuite disclaims any obligation to update these forward-looking statements.